Gold and Bitcoin have both recently broken through key levels. Bitcoin has broken above the downtrend line formed during this bear market and reclaimed the 21-week moving average, which previously served as a significant dividing line; Gold, after hitting a record high at the beginning of the year and experiencing a significant correction, has regained strength. Meanwhile, US government debt has surpassed $40 trillion, with the 10-year Treasury yield briefly touching around 4.70%, keeping global long-term financing costs under pressure.
As US debt continues to expand, future policy may have to tolerate a period of relatively high inflation to alleviate the pressure of real debt servicing. Against this backdrop, hard assets like Gold and Bitcoin are regaining attention. Recent measures by the US Treasury Department targeting the long-end of the bond market further signal changes in the macro environment.
$40 Trillion US Debt Coupled with 4.70% Treasury Yield: Rising Pressure in the Long End
Over the past year, US government debt has grown by approximately 10%, rising from $36 trillion to $40 trillion. In early July 2025, the US statutory debt ceiling was raised by another $5 trillion, creating greater room for future debt expansion. At the same time, large US tech companies are issuing bonds at a record pace to finance AI infrastructure, with massive new corporate bond supply further competing with US Treasuries for investor funds.
Foreign demand is also shifting. Japan remains the largest foreign holder of US Treasuries, with holdings around $1.1 trillion. However, as Japan's 10-year government bond yield approaches 3% and the 30-year yield rises above 4%, the attractiveness of domestic bonds has significantly increased. Chinese investors are showing a similar trend, with their US Treasury holdings down about $700 billion from historical highs.
Facing pressure in the long-end market, the US Treasury Department announced on August 19th that it will at least double the liquidity support repurchase size for 10-year to 30-year nominal coupon Treasuries. The maximum single-operation size will be increased from $2 billion to at least $4 billion, to be implemented from September 9th to November 4th. While this is not identical to the Fed's 2011 'Operation Twist', the intended market effects are similar: to ease pressure in the long-end market and limit further rises in long-term financing costs.
Gold and Bitcoin Break Through Simultaneously: Hard Assets Regain Attention
The combination of Gold and Bitcoin remains a relatively effective hedge against persistently rising debt. As US debt continues to expand, the logic for capital rotation into hard assets like Gold and Bitcoin is further reinforced. Meanwhile, the market had previously priced in the possibility of two more rate hikes this year, but the renewed trend of cooling inflation is now bringing new changes to the market environment.
Technical signals are also noteworthy. After hitting a record high in late January 2026, Gold corrected significantly. Its weekly RSI once fell to the lowest level since the start of this gold bull market in September 2023, creating conditions for a reversal. Bitcoin has already broken above the downtrend line of this bear market and reclaimed the 21-week moving average. Previous cycle indicators also suggested Bitcoin was very close to a bottom, with August potentially being an important window for confirming the cycle low.
Overall, the surpassing of $40 trillion in US government debt, pressure on long-term Treasury yields, and the US Treasury's expansion of long-dated bond repurchases together constitute the important macro backdrop behind the recent breakthroughs in Gold and Bitcoin.
Policy intervention can temporarily ease pressure on long-end yields but can hardly fundamentally reverse the pressure from debt supply and the global fixed income market. This means the trend of capital flowing back into Gold may continue, and the same logic could gradually manifest in Bitcoin. Moving forward, what deserves more attention is whether Bitcoin's cycle bottom in August can be definitively confirmed and whether the policy response to long-end Treasury yields can continue to be effective.
Some of the above views are from BIT on Target. Contact us for the full BIT on Target report.
Disclaimer: The market carries risks, and investment requires caution. This article does not constitute investment advice. Digital asset trading can involve significant risk and volatility. Investment decisions should be made after careful consideration of personal circumstances and consultation with financial professionals. BIT is not responsible for any investment decisions based on the information provided in this content.
